SPY Trends and Influencers February 18, 2023

• Posted by Greg Harmon
• on February 18th, 2023

Last week’s review of the macro market indicators saw heading into the February options expiration, equity markets lost some of their strength, giving back some of the recent gains, but remained with a bullish bias. Elsewhere looked for Gold ($GLD) to pause in its pullback while Crude Oil ($USO) consolidated in a tight. The US Dollar Index ($DXY) continued to drift to the upside in the downtrend while US Treasuries ($TLT) consolidated after their bounce move.

The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) both looked to consolidate in their uptrends. The Volatility Index ($VXX) looked to remain stable in the normal range making the path easier for equity markets to the upside. Their charts were building bull flags on the shorter timeframe, consolidating the moves up. On the longer timeframe the $SPY, $IWM and $QQQ all continued to hold over the November highs showing some strength.

The week played out with Gold resuming the move lower while Crude Oil continued in consolidation until a move lower Friday. The US Dollar consolidated the recent gain and drifted higher while Treasuries resumed their move lower. The Shanghai Composite failed at resistance again while Emerging Markets moved to the downside.

Volatility continued to hold at the bottom of the 2022-23 range. This allowed equities to start the week with a move higher. They then consolidated in big ranges midweek before pulling back to end the week. This resulted in the SPY ending the week slightly lower with the QQQ and IWM were also little changed but higher. What does this mean for the coming week? Let’s look at some charts.

SPY Daily, $SPY

The SPY came into the week building a bull flag after printing a higher high. It continued the flag early in the week and tried to build momentum for a move up out of it but failed and fell back to short term support. The daily chart shows the RSI is pulling back to the midline in the bullish zone with the MACD crossed down but positive. Both momentum indicators seem to be resetting lower.

The weekly chart printed a second inside week. The RSI on this timeframe is stubbornly holding over the midline but short of a move into the bullish zone. The MACD is positive as it moves higher. There is resistance at 407.50 and 411 then 413.50 and 417.50 before 420 and 423 then 425.50. Support lower comes at 405.50 and 403.50 then 400.50 and 397.50 before 394.50 and 391. Consolidation in Uptrend.

SPY Weekly, $SPY

With the February options expiration in the books, equity markets showed resilience holding up well despite an onslaught of negative inflation news and shifting narrative to further FOMC tightening. Elsewhere look for Gold to continue its short term pullback while Crude Oil consolidates in a tight range. The US Dollar Index continues to drift to the upside in the downtrend while US Treasuries continue a short term downtrend. The Shanghai Composite looks to continue the pullback in consolidation while Emerging Markets pullback in their uptrend.

The Volatility Index looks to remain normal and stable making the path easier for equity markets to the upside. Their charts look strong, especially on the longer timeframe holding in consolidation after making higher highs. On the shorter timeframe both the QQQ and SPY are holding over support while the IWM has started to move higher out of a bull flag. Use this information as you prepare for the coming week and trad’em well.

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